Delian Asparouhov: Varda’s Space Factories & Founders Fund

Delian Asparouhov, Co-Founder of Varda & Partner at Founders Fund | We discuss Varda's recent space missions, regulatory challenges, and the broader impact of venture capital in the aerospace industry. Delian shares insights on the complexities of defense and space regulations, the relationship between Silicon Valley and Washington DC, and in particular, the context of the Hill and Valley Forum, which aims to bridge the gap between tech leaders and defense officials. He also shares his thoughts on the future of space exploration—from adapting to other gravitational environments like Jupiter's, to the rise of the “Space Club,” including Eric Schmidt’s new role as CEO of Relativity. In addition, we go deeper on Delian’s investment strategy as he just hit the 6 year mark at Founders Fund, the importance of having an operational background in venture investing, and why seed investing might just be more effective as a hobby. Delian gives us the inside look at his investments in companies like Ramp, Sword Health, Varda, Hadrian, and more. Molly on X: https://x.com/MollySOShea Delian on X: https://x.com/zebulgar Follow Sourcery for the latest updates! https://www.sourcery.vc/ TIMESTAMPS: 0:00 - Welcome Delian To Sourcery! 0:40 - Live From Varda Space Factories 02:36 Stranded Astronauts 13:10 Varda's Big Milestones 20:38 Growing Space Club: Eric Schmidt, New Entrants & Competitors 23:11 The Role of Public Policy in Space Exploration 28:07 Defense Funding & Government Contracts 29:37 Friction in Venture Capital & Defense Tech 33:12 Hill & Valley Forum: Bridging Silicon Valley & DC 36:05 Challenges in Defense Tech Funding 40:17 Founders Fund Reflection & Investing Strategies 53:28 Lessons From Fatherhood #podcast #investing #space #technology #venturecapital #entrepreneur #startup #siliconvalley

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  So we just landed our second mission about two and a half weeks ago now. There is going to be a launch or landing for every board meeting this year. By next year, there's going to be a launch and landing between every board meeting.

• 0:09Molly O'Shea?

  So the space club is getting bigger and bigger.

• 0:12Speaker 00

  We've like overregulated the physical world to the point where the cost of capital is just way more than an AI company.

• 0:17Molly O'Shea?

  Your investing story is kind of under the radar. Also lists out every single company you've ever invested in.

• 0:23Speaker 00

  If you want to really win the solar system Olympics, go train on the surface of Jupiter. Have like a little spacecraft or something up there floating in the clouds.

• 0:32Molly O'Shea?

  Why go to Aspen when you could go to Jupiter?

• 0:34Speaker 00

  Exactly. Altitude training, Jupiter training.

• 0:39Molly O'Shea?

  All right, Delian, we are live from Varda.

• 0:42Speaker 00

  Oh, yeah.

• 0:43Molly O'Shea?

  This is a year after we first recorded.

• 0:47Speaker 00

  I actually don't even remember that. Okay.

• 0:48Molly O'Shea?

  Oh, my God. You don't remember that?

• 0:51Speaker 00

  Was I here? I wasn't here, was I?

• 0:53Molly O'Shea?

  You were here.

• 0:54Speaker 00

  Oh, okay, but it was remote.

• 0:55Molly O'Shea?

  It was remote.

• 0:56Speaker 00

  Okay.

• 0:56Molly O'Shea?

  Yeah, this was like your debut launch back into the podcasting game.

• 1:00Speaker 00

  Yeah, it went quiet for a little bit.

• 1:01Molly O'Shea?

  You went really quiet and now you're quite active and you're a regular on technology bros.

• 1:06Speaker 00

  Well, I don't like being loud when we're not doing things here. So, but now we're doing things and hopefully forever we'll be doing things. So I can go back to my natural habitat of being loud and annoying.

• 1:16Molly O'Shea?

  Okay, well, I think the internet loves that and can't wait. So we are in your factory of factories.

• 1:25Speaker 00

  Our factory.

• 1:26Molly O'Shea?

  Our factory of factories.

• 1:28Speaker 00

  Yeah.

• 1:28Molly O'Shea?

  Okay, why is it ours?

• 1:30Speaker 00

  Oh, it's not mine.

• 1:31Molly O'Shea?

  Okay.

• 1:31Speaker 00

  It's owned by our shareholders.

• 1:34Molly O'Shea?

  Really good diplomatic response.

• 1:36Speaker 00

  Yeah, it's a little bit of yours, too. I think you're a shareholder, Varda.

• 1:39Molly O'Shea?

  I'm not.

• 1:40Speaker 00

  You're not. Suck, suck.

• 1:41Molly O'Shea?

  Can I have some?

• 1:42Speaker 00

  Ah, yeah.

• 1:44Molly O'Shea?

  All right, so I'm actually quite surprised. I was expecting your little one to be running around with you. Just like, you know, Elon and X. When is this gonna happen?

• 1:54Speaker 00

  Yeah, um, you know, I did bring him in one or two days when we had some childcare issues. And then my co-founder sat me down and was like, look, there's a lot of parents in the office. If you start bringing your kid in, then everybody's gonna have to bring their kid in. And then there's gonna be kids running around. I was like, that's a fair point. So, you know, I think Elon and his sort of...

• 2:15Speaker 00

  worldview and state of the world that he lives in is you're probably able to break the rules and other people don't expect to be able to break the rules the same way. But when I break the rules, other people seem to copycat. So you need to follow, be a rule follower.

• 2:28Molly O'Shea?

  Yeah, you gotta set a good precedent. Yeah, good example.

• 2:32Speaker 00

  Exactly. Gotta be a good boy.

• 2:34Molly O'Shea?

  You gotta be a good boy. Dalian, you were stuck in space and most recently, some astronauts were stranded in space.

• 2:41Speaker 00

  For about the same amount of time, kind of funny, right?

• 2:43Molly O'Shea?

  Really?

• 2:44Speaker 00

  They were both stuck up there for about eight and a half, nine months.

• 2:46Molly O'Shea?

  Oh.

• 2:47Speaker 00

  Makes you think.

• 2:47Molly O'Shea?

  Is there something, is there more to this?

• 2:49Speaker 00

  It's also how long it takes to incubate a human.

• 2:53Speaker 00

  I'm just saying, somebody should study this. Somebody should look at, why do things keep getting stuck in space for the same amount of time it takes to gestate a human?

• 2:59Molly O'Shea?

  Alright.

• 3:00Speaker 00

  Maybe people are gestating humans up there and then using these delays and strandings as an excuse to make space babies that are really tall because like they don't have gravity in the womb. And so then now, if 18 years from today, there's like two like LeBron looking dudes, but that are like seven foot tall, well, no, one was grown in the Varda capsule, the other was grown on the stranded astronauts.

• 3:21Molly O'Shea?

  They're like noodle babies, though.

• 3:22Speaker 00

  Exactly. Yeah, super thin.

• 3:23Molly O'Shea?

  But there are, there are problems with that, though. Like, I was reading on those astronauts, and I sent this to you, your eyes become flat.

• 3:32Speaker 00

  Oh, there's a lot of things that are very bad.

• 3:33Molly O'Shea?

  And your heart shrinks and you lose your bone density.

• 3:38Speaker 00

  If you, the senator from Arizona, I should not be forgetting his last name, but Mark, I'm forgetting his last name, Warner, that was the pair of twin astronauts where he was the one that basically went up to orbit for a year, his twin stayed on the ground for the year and they basically like analyzed the, you know, sort of two of their like biomarkers, etc. to see how they did. He wrote a book about like his return back to Earth after, you know, a year up there in microgravity. It's if you don't read it when you're eating a meal, it's just brutal.

• 4:07Molly O'Shea?

  What?

• 4:08Speaker 00

  Brutal. All the worst like side effects you could imagine, just like. Can't walk, can't hold his bowels, like can't hold his, you know, bladder, like it's just everything hurts, like all of your bones are like recompressing again.

• 4:21Molly O'Shea?

  Oh my god.

• 4:22Speaker 00

  It's like, you know, the amount of radiation that he took on, his heart is smaller because it's not pumping as much, like, you know, vision is super blurred. I was just like, every bodily system, when he returned, you know, back down to 1G, just like was all, you know, very bad for a long period of time. And so, yeah, we have not quite figured out how to be up there for extended period of time. The real solution will just be like, we need to have like centrifugal, you know, sort of ships that allows us to stay at 1G while we're up there. And then the, yeah, interesting stuff will start to happen when there is humans that are on the, via surface of, you know, Mars and moon for extended periods of times, or even generations, such that, you know, and there's been some sci-fi books that have been written about this, but if you like grow up on the moon, you probably just like can't come to earth, because literally just your entire body system will just collapse, because it has just not been built around a full 1G.

• 5:05Speaker 00

  Now, what I've always thought, on the flip side, is if you want to really win the solar system Olympics, go fucking train on the surface of like Jupiter, or have like a little like, you know, spacecraft or something up there floating in the clouds, and then you're gonna be jacked, dealing with like 6G. That's some real shit.

• 5:23Molly O'Shea?

  Why go to Aspen when you could go to Jupiter?

• 5:25Speaker 00

  Exactly, altitude training, Jupiter training.

• 5:29Molly O'Shea?

  That's, uh, yeah, that's pretty creative.

• 5:31Speaker 00

  I thought about this, I'm like, why don't I then just start wearing a weight vest at all times? And so just like steadily work my way up to 6G.

• 5:37Molly O'Shea?

  Why don't you wear a weight vest?

• 5:39Speaker 00

  I don't know.

• 5:40Molly O'Shea?

  I wear one when I go for walks.

• 5:42Speaker 00

  I should probably do that. I should probably just be wearing a weight vest at all time, and then steadily increase it until I'm on the surface of Jupiter, and then I'm the person strongest, I'm the strongest person on the planet. This seems like a foolproof plan, I haven't yet really dug into it, but it seems like it would work. I see no reason why it wouldn't work. Maybe my bones would eventually crack, or like I'd just get really annoyed because I have to walk so slowly for so long and develop muscle mass, but...

• 6:04Molly O'Shea?

  I could go on with so many questions about this. How, how much weight could it go up to? I don't know.

• 6:11Speaker 00

  I don't know.

• 6:11Molly O'Shea?

  I don't know.

• 6:12Speaker 00

  Andrew Huberman and get him to start studying this. It should be like one of the new Huberman protocols, just ultra weight vests, all times. You sleep with it, you eat with it, you like, you know, go to the bathroom wearing it.

• 6:23Molly O'Shea?

  Okay, bringing it back to the astronauts that were stranded in space for nine months, their bodies were affected and the whole process of this was also just chaotic. Could you explain more about what happened and why? Was there a deep state involved? Like, what's going on here?

• 6:37Speaker 00

  Yeah, I mean, to backtrack all the way to the beginning of the program, right? You know, Obama era, we shut down the space shuttle, which, you know, almost certainly was the right thing to do, but it left us somewhat stranded in terms of, using that same word again, stranded, without an ability to basically get astronauts up to orbit. And so for a period of years, we were dependent just on the Ruski's to get up using their Soyuz capsule. And so in order for us to get American astronauts under the ISS, which, you know, is a decent chunk of it, is, you know, American modules, we would have to basically go send out our astronauts to Russia to have them sent up and down. In that same time period, NASA started to think about, you know, basically what would a, you know, sort of commercial contract look like for crew resupply? And the original thinking and NASA's

• 7:20Speaker 00

  predisposition was to do a single contractor for it. The plan was for it to be Boeing. They were marching down that plan. They were weeks away from announcing. They backtracked in the final moments and they're deciding, okay, actually, we should have a second provider. The entire structure of the contract is kind of insane in that they literally just, you know, gave SpaceX the same workload, but said the price for you doing it is going to be half of Boeing. So it's, you know, hey SpaceX, go deliver astronauts. You got to do it for 10 bucks. Boeing, do the exact same thing and you get, you know, so 20 bucks. Why? How? Et cetera? You know, probably mostly just has to do with the fact that Boeing had like a 200 person team of lobbyists versus, you know, SpaceX did not. But thank God that was the case because, you know, sort of fast forward, you know, I think that program was awarded sometime 2013, 2014. You know, fast forward to obviously, you know, now where

• 8:05Speaker 00

  we are, you know, 11, 12 years later, that Boeing, you know, sort of program was severely, you know, sort of delayed. They had multiple flights, you know, basically pushed. SpaceX's, you know, was slightly delayed, but still went up, you know, relatively. On time in 2020 and was now done several flawless missions. This was the first basically test mission of the Boeing Starliner sort of program. And they had consistently had thruster issues in prior tests, but you clearly chose to ignore or not make fixes on this. They had similar basically thruster issues during this flight test where they were experiencing some leaks. Weren't able to entirely identify the cause, and this was after they had dropped off the astronauts on the ISS. So at the time NASA was faced with an incredibly difficult decision, which was,

• 8:48Speaker 00

  do you bring the astronauts down in this vehicle that is experiencing anomalies? And if things go haywire, that looks really, really, really bad because it's the first, you know, I don't know if you know, but we actually have not yet lost an astronaut in space. Yeah. We've lost astronauts on the ground due to some tragedies. You know, there was the Apollo one capsule fire. We've lost astronauts that were flying their T39Bs, I think was the plane, you know, on approach due to some fog, but we never actually lost an astronaut in space. So that could have been the first cause of that. The other not so great path is say, okay, we're going to just de-orbit this vehicle without the astronauts on board. But now you've introduced a ton of crazy logistical challenges where now all of a sudden, you have a vehicle that's gone down without astronauts and you have astronauts that are now up on the International Space Station,

• 9:33Speaker 00

  without a vehicle to bring them down and you need to rejigger all the schedules because the future vehicles coming up were not meant to take down an extra two people.

• 9:43Speaker 00

  NASA took some time to deliberate on this. As this is happening, I thought it was pretty crazy because the flight was, I believe, like roughly beginning of June of 2024. Clearly, they started having issues within the first week or two. And nobody was talking about the fact that a month later, there was still no decision made. And these astronauts, you know, for what was supposed to be a two-week-long mission were stranded up there. I tweeted this fact. It made people, some people very unhappy because they did not think that it was a valid term to be using the word stranded. I will say, not to toot my own ego or horn too much, but the word stranded had not been used in NASA communications around this mission at all, nor in anybody else's communications. After my tweet went viral, 24 hours later, NASA did put out a press release saying the astronauts are not stranded.

• 10:27Speaker 00

  And many large press articles came out saying that they are not stranded.

• 10:32Speaker 00

  They ultimately made the decision to de-orbit without the astronauts onboard, leaving the astronauts there for an unexpected indefinite period of time. And if I got on a flight that was supposed to return me in two weeks and that flight turned into a nine-month trip, I would consider myself stranded at the airport. And I think the astronauts felt the same way. There's clearly now confirmation from SpaceX and Elon that he offered to bring them back sooner than the, basically NASA had a pre-existing schedule that they could slot them into, but that meant not returning them until the February-March timeframe. He basically offered, hey, let's pull this in. Now, that does change things because somebody needs to pay SpaceX for the fact that they pull in the schedule. But a very doable problem. The Biden administration clearly turned that down because they didn't want to give SpaceX,

• 11:15Speaker 00

  an Elon, a political win against Boeing in the midst of the campaign he was campaigning for Trump. And so, yeah, I think that was not the right decision to make. Butch and Sunni were the two astronauts. Sunni, I believe, was facing some bone density challenges and being up in space only exacerbates that. And so if I were in her shoes, I'd be extremely frustrated that the president decided to risk my personal health and asked me to stay in space for longer for sake of a political gambit to make sure that his opponent didn't get a win. So, yeah, do you think there's a part of that, whether you call that the deep state or that's the shallow state? Because he had a shallow depth of his mind at the time. Either way, he was not particularly deep in the bureaucracy. I've seen some deeper state stuff than that.

• 11:57Molly O'Shea?

  Well, breaking news, you get it here straight from Delian. And it was interesting to see there, well, I don't know if you noticed, but like the narrative that they were telling like shifted a little bit in the last week. Like, they kind of confirmed that they were stranded and then they got on a video call and they're like, you know what? We're astronauts, like, we're prepared for this, we can do this all the time. And you're like, no, you've been stuck up there for a really long time.

• 12:21Speaker 00

  Totally, and they also confirmed that they could have come down earlier and that it was political challenges that prevented that. And so, look, as an astronaut, you're supposed to be political, they have to be very careful because they want to keep their job, irrespective of who's in president, so that one day when they're selecting for the Mars mission, you're not on the bad side of whichever political party's in office. So I don't blame them, it's a very tricky situation to be in, but one can just look at the facts and... You know, sort of recognize the situation they were put into. You know, obviously you want to serve your country and if your country requires you to unexpectedly be in orbit for nine months, of course, I understand that. But that was not the case. They were forced to be up in orbit for, you know, sort of nine months when that was not the expectation and. You know, they didn't have the clothes packed, you know, sort of for that. Obviously, you know, resupplies came up, you know, sort of with that. But yeah, I cannot imagine that those nine months were particularly smooth for them.

• 13:06Molly O'Shea?

  Well, speaking of orbit and landing and launching, can we talk about Varda?

• 13:11Speaker 00

  Yeah, so we just landed our second mission about two and a half weeks ago now. That was the company's first time with, you know, some major revenue recognition where we actually delivered for a customer. That was a AFRL payload onboard as well as our own internal pharmaceutical payload onboard. We just launched our third mission now, six days ago.

• 13:33Molly O'Shea?

  Congratulations.

• 13:34Speaker 00

  Yeah, thank you. So far, so good with that mission. Obviously, he hasn't yet come back, but hopefully pretty soon. That one is actually our first fully dedicated DOD mission. So to date, we, our first mission was truly just an MVP demo. Second mission was a ride share between DOD and pharma. This one was dedicated to the DOD where there is an inertial measurement, you know, sort of unit onboard. And then our upcoming, you know, sort of mission, our fourth one, that'll be actually our first also dedicated purely to pharma, you know, sort of mission. So. Yeah, it's been fun, you know, sort of realizing that this infrastructure that we wanted to build out for the, you know, sort of space factories. Also has a ton of, you know, sort of national security priorities that can help fulfill. And so we're super thrilled to be able to, you know, sort of serve the warfighter and. Serve our country while at the same time continuing to build up our commercial business.

• 14:19Speaker 00

  But yeah, I think if you were to tell me from when we started it, you know, I started working on the company now full time. Four years and seven months ago or so, and I think I'm pretty, pretty pleased with where we're at. Obviously, I think there's definitely always things that we could be doing better, but you know, for. This chunk of time in to be, you know, hopefully four missions launched and landed this year and tens of millions of dollars in revenue and. You know, a pretty solid team out here in El Segundo. Pretty, pretty pleased with where we've gotten to.

• 14:44Molly O'Shea?

  How did you get the unlock to get this kind of speed in such a regulated industry? It feels like you guys are sailing now.

• 14:50Speaker 00

  Yeah, you know, on the, there's a couple of different components of making, you know, sort of that happen. A portion of it for sure is like you need the, you know, sort of funding to be able to go pursue this, obviously having, you know, my venture background help with that. A portion of it is obviously like having vehicles ready that can, you know, sort of fly and most importantly, fly nominally. You know, a lot of that obviously is our in-house team that has a phenomenal track record largely, you know, from SpaceX and some heritage from the crew in the Cargo Dragon project, which while much larger reentry vehicles, at the end of the day, you know, were reentry vehicles. And so I think a lot of that helped. Some of it was also, you know, being able to rely on external partners in the supply chain that are much more mature today in the commercial space industry relative to, let's say, when SpaceX started, you know, in 2000, you know, whatever it was, you know,

• 15:35Speaker 00

  five, where there really wasn't commercial providers of almost anything, you know, in the aerospace industry. So as an example, you know, our first three missions, we executed with Rocket Labs Pioneer Platform, which is basically a satellite bus platform with propulsion onboard. That way we could really focus on what our original core expertise was, which was the reentry vehicles and the, you know, sort of drug reactors. Without that, it almost certainly would have been much higher burn and a much longer time to flight, given the size of the vehicle and the complexity of the, you know, sort of mission. And so that's the vehicle side. On the regulatory side, as you know, it hasn't been smooth. We definitely, you know, first mission was supposed to be up there for two months, turned into eight and a half. A part of it was just nobody's ever done what we were trying to do before, small reentry vehicle, landing on US soil, fully commercial, but also trying to land at a military range because the military ranges are the only places that are large enough such that you

• 16:20Speaker 00

  have a bunch of empty space so you don't accidentally hit Grandma Sue in the head with the reentry capsule. But I think a part of what's, you know, gotten us to high cadence there is honestly just for now, leaving the US, which is, you know, not the best answer in the world, but, you know, other countries, you know, have more empty space, in particular, Australia is very, very empty. And that means that there's a private company that owns a large enough piece of land and a range there. So rather than negotiating against military priorities, we can instead, you know, be the top priority of that range. And then obviously on the FAA side of, you know, sort of the regulatory, you know, sort of challenges there, obviously successful flights. You know, are what really help with that. So yeah, I think it's really exciting. I think I tweeted this the other day, but you know, we're we got an upcoming board meeting, you know, second week of April.

• 17:03Speaker 00

  And I was starting to put that together. I was just thinking you had the talking point of, man, there's been so many times where it's like, we will fly, we will fly, we will fly. And now it's like, wow, since the last board meeting, we both landed and launched again. And then when I was thinking about all the future board meetings, I'm like, there is going to be a launch or landing for every board meeting this year. By next year, it's going to be, there's going to be a launch and landing between every board meeting. And by the end of that year, it's going to be multiple launches and landings, you know, by each board meeting. And so, yeah, it's super exciting to see how we're, I think, turning what was originally a pretty crazy idea in 2020 into something that, you know, is going to look pretty commonplace where you're just going to see a shooting star if you live in the South of Australia, you know, every month, every week. And then, fingers crossed, we also bring those shooting stars back to the United States pretty soon, too.

• 17:44Molly O'Shea?

  Sounds like it'll be a very fun board meeting.

• 17:47Speaker 00

  I think so. Yeah, we'll see. I definitely optimize for board members that are brutally honest. And so that doesn't always

• 17:55Molly O'Shea?

  It's still not enough. Work harder.

• 17:57Speaker 00

  Exactly. It doesn't correlate with fun, but I like the idea of one day having fun.

• 18:02Molly O'Shea?

  That would be fun. So how big is the team now? The office is huge. It seems like there's a lot of people in here. We have people down below, people up here on computers. How big are you guys?

• 18:12Speaker 00

  Yeah, we're about 115 people, full time, you know, and almost entirely based here in the El Segundo headquarters.

• 18:19Molly O'Shea?

  Okay.

• 18:20Speaker 00

  We have a handful of folks in our DC office that we opened about two years ago, and we just opened a Huntsville office about, you know, a couple of months ago. But those are both single digit, you know, sort of person offices. So the vast majority of it happens here. And yeah, everything, you know, basically happens, it's about a 60,000 square foot facility. The, you know, so rough breakdown is 40,000 square feet out on the factory floor, 20,000 square feet of office space. This is where we build basically all the spacecraft. So, you know, raw materials and, you know, parts come in from vendors. We do all the master assembly, a significant amount of the testing here. We even have a propulsion test end, test stand outside, where we can actually fully load up, you know, basically the vehicle, perform a full, you know, sort of de-orbit burn in, you know, the backyard of our, you know, basically parking lot. And we have a structure out there where even if you were to toss a grenade inside and there was a fully detonative event,

• 19:04Speaker 00

  Um, you know, everybody here inside would be sort of totally fine. And so that means rather than like having to drive out to Mojave or go out to sort of West Texas to do basically engine tests, we can do them same day that we basically, you know, make a, make a thruster. And so it's exciting to see this just like new era of aerospace where it's like all of these things that generate a ton of value can all happen in like a factory in an area of, you know, sort of this size and a part of this, because like we just know that we don't have to think about the whole like solving the rocket problem. We can just sort of focus on, you know, the space factory, you know, sort of problem. And that's wasn't the case 15 years ago. And then we also have, you know, sort of pharmaceutical lab here too. So, you know, it's not just the aerospace stuff that we do here, but there's a fully A-grade pharma lab. And then we're actually about to open up our second office space about three minutes from here.

• 19:50Speaker 00

  That's going to be a dedicated larger pharmaceutical lab. And so I always like to joke that we're the only place where you see like small molecules getting formulated about 100 feet from an engine, you know, test stand. And so I'm kind of cool to have that all under one roof.

• 20:04Molly O'Shea?

  That's very cool. I remember visiting you at your first office and I don't remember where it was, but it seemed super sketchy. It seemed very sketchy.

• 20:12Speaker 00

  Uh, I thought it was a pretty nice neighborhood, but yeah, maybe it was sketchy. Yeah. It was pretty industrial. Although I mean, this place is pretty industrial too. We're like, you know, on one side, it is kind of funny. On one side of the train tracks from us, we have Space Force and Space Systems Command. And then on the other side, we have a cement plant. And my joke for the longest time is like, well, it's probably appropriate that we're roughly halfway between the two, because like that is kind of the goal of the company, be half cement plant, half Space Force.

• 20:35Molly O'Shea?

  Okay.

• 20:37Speaker 00

  Little industrial, a little spacey.

• 20:38Molly O'Shea?

  So the space club is getting bigger and bigger by the day.

• 20:42Speaker 00

  It's true.

• 20:42Molly O'Shea?

  We have a new entrant and that's Eric Schmidt.

• 20:45Speaker 00

  Oh, yeah.

• 20:45Molly O'Shea?

  He just joined as CEO of Relativity.

• 20:47Speaker 00

  That's true.

• 20:48Molly O'Shea?

  Can you share some insights on this or maybe even from the customer perspective, why you would use Relativity versus SpaceX?

• 20:55Speaker 00

  Yeah. I mean, look, obviously we're very, very, you know, sort of happy, you know, sort of customers of, you know, sort of SpaceX. But at the same time, you're, you know, in any part of your supply chain, you'd always obviously love to have multiple vendors. Right now, there's nothing that comes anywhere close to, you know, sort of their cost, their cadence, their capabilities. Eric Schmidt, you know, entering the business scene is definitely an interesting wrinkle. You know, Relativity, you know, as now has been publicly reported, was definitely on like the brink of bankruptcy, you know, so earlier or, you know, towards the end of last year. Eric Schmidt coming in as the rescue crew. You know, he's not a, you know, there's not a historical pattern that you can match to you on that where it's, you know, sort of worked before.

• 21:39Speaker 00

  I've obviously incentivized for years for him to work. I would love for there to be, you know, sort of more launch providers. I think, you know, realistically, that seems like a really difficult hole to dig yourself out of where you're, you know, sort of billions of dollars, the team's probably somewhat, you know, sort of demotivated. And if you compare that to, you know, there now are a decent number of players, you know, obviously Rocket Labs really succeeded with their Electron, you know, sort of platform. They're now starting to work on Neutron. Their Space Systems Group is really quite large. You know, Bezos has finally gotten Blue Origin, you know, to orbit for the first time. Firefly is clearly showing some capabilities, obviously most recently on their lunar lander, but their, you know, sort of launch, you know, sort of vehicle has shown some promise. You've got folks like Stoke Aerospace that I think are really pushing the fold on what, you know, sort of next generation, fully reusable, you know, sort of rockets could look like.

• 22:20Speaker 00

  So, man, it's definitely, you know, hard to imagine, you know, how that one works. It's not a challenge that I personally would want to take on, no matter how many billions I had in my bank account. I'd probably prefer to just start from scratch. But, you know, sort of credit and, you know, credit to him and the best of luck to him. I hope that he's able to figure it out. It'll be interesting to see also how much of like, you know, he's obviously a phenomenal operator, but, you know, sort of how much of his prior operational work translates to this field. Obviously, like Elon, was he able to jump from like software payments land into, you know, rockets and, you know, cars? And people kind of forget that at the end of the day, he was actually a software guy first. You know, can Eric Schmidt execute that same transition? And especially, you know, at the age that he's at, all that, very non-trivial. But, um, yeah, better, more people try than not.

• 23:01Molly O'Shea?

  Big task ahead.

• 23:02Speaker 00

  Big task ahead, yeah. Don't envy him. I'm not sure that I, you know, envy many people, but I definitely don't envy him.

• 23:07Molly O'Shea?

  Okay. Well, pulling out a big broader, what is the current state of play between public policy and space companies?

• 23:17Speaker 00

  The, the job of regulating space companies is split into multiple different agencies, which, you know, sort of makes it a little trickier on the startup side to navigate that all. To give you like, you know, the three simple examples, not everybody's regulated by all three of these, but let's say the three that are, you know, sort of most important of ARDA. We get regulated by the FAA, both as a Part of our launch on SpaceX's rocket as well as our reentries. We get regulated by the FCC for the radio spectrum that we use to communicate with our satellite. And they specify, so for example, recently the FCC actually specified a particular frequency for ISAM, which is in-space assembly and manufacturing. And so for, you know, basically spacecraft like ours, we're now assigned a particular frequency,

• 24:01Speaker 00

  but you still have to apply for it, get a license. And then you're also regulated by NOAA, which, you know, sounds surprising because I think it's like the National Ocean Something Administration, I forget. But anyways, it's kind of funny that an ocean regulator is regulating space, but they actually regulate all of the cameras that are up in orbit. So if you have a camera pointing anywhere, NOAA is responsible for that. There's been some talk about, do you centralize some of these functions into a, you know, a single vertical space regulator? That way you're not, you know, splitting this across a bunch of departments. Obviously, the FAA has, you know, sort of tried to do some work to modernize, you know, given that launch is now happening at a cadence closer and closer to like 747s taking off and landing from airports.

• 24:45Speaker 00

  And a lot of these spaceports are getting very high traffic at this point. I think there's something that they've adapted to well. You know, I lived in, you know, sort of Miami for a while and it was always interesting as a private pilot that would fly around there, seeing that at some point there used to be basically what were known as temporary flight restricted areas, so basically areas that they would turn on and off around Cape Canaveral. To at some point, they basically just put up a permanent, like what's known as NOTAM, Notice to Airmen. There's basically like, look, there's basically almost always flights happening here. Just don't plan your flight through here at this point because it's happening all the time. And so it's cool to see the nation start to adapt to like, hey, this stuff is happening so often that like the regulations need to not just be like, oh, this is a one-off event. But like this area of the country is like meant for launch now. So let's just like, and like you can watch, like even in my time that I lived in Miami,

• 25:28Speaker 00

  I watched how like commercial flights used to fly down mostly the east coast of Florida when they're coming from like New York to Miami. And now they basically avoid it, either like run on the center of it or they stick on the outside until they get to Cape Canaveral. And then once they're below it, they come onto the coast. And so it's cool, just like even as a practical passenger, you like slightly feel the effect. So it means that New York to Miami flight is like two minutes longer. Whatever, it doesn't matter the grand scheme of things, probably good for the country that we can launch rockets. But it's cool to see them start to adapt that stuff. We're obviously hopeful that that's what happens with reentry where it becomes so common that, hey, there's just these flight corridors where it's not meant for planes anymore. It's meant for spacecraft coming in for space. We're not there yet, but clearly we did it on launch. And so I'm hoping that happens in space. There's clearly Brendan Carr, the new FCC Commissioner, is talking about how to make this easier for space companies, given that a lot of space companies will actually go

• 26:13Speaker 00

  to Germany, because you can actually get a license from the German regulator of spectrum, and that is valid in the United States. That's probably a broken state of the world to be in. You probably don't want American space companies having to go to Germany to get their spectrum approvals. And then I honestly don't know too much about NOAA. But yeah, I think these things are progressing in the right direction. Probably this new administration helps some of the pressures with all these things. I think it kind of only happens where it's like you can talk about this stuff in theory, where FAA had these reentry regulations, and they were like modern in theory, but in practice it didn't matter until Varda went through them, and in some ways got beat up by them. And then we could go back and say, hey, here are ways that we would improve them that we think still allow the FAA to prioritize public safety, but also make it a little more streamlined.

• 26:57Speaker 00

  And so Bruy actually wrote up, my co-founder, wrote up an op-ed in Payload Space, I forget, maybe it was like two, three months ago, about how he would architect the regulations. And we got some really positive feedback from the FAA on that, about how they're thinking about actually significantly incorporating a lot of his feedback into the next-gen version of these reentry regulations. So yeah, you can't always just wait for the president to do this stuff for you. You gotta go fight the fight yourself, and the best way to do that is just go try and do these activities. Now, I do agree with the Peter General philosophy of part of why a lot of innovation got steered into digital world, AI, etc., is because we've overregulated the physical world to the point where the cost of capital and the amount that it takes me to build a company like this is just way more than an AI company, although they have to deploy all their chips

• 27:42Speaker 00

  and everything. But still, software companies don't have to deal with the FAA putting them on hold for eight months. During those eight months, I had employees, we had burn, we had an office. Like, that's gotta come out of somewhere, mostly ends up coming out of the fact that we need to fundraise more and be more dilutive, and that means fewer returns for our shareholders. And so hardware is definitely hard, and we're probably making it unnecessarily hard on ourselves in this country. And that's a huge disservice to our ability to innovate in the real world.

• 28:07Molly O'Shea?

  You've been particularly outspoken against defense funding and government contracts. Could you share more about that?

• 28:16Speaker 00

  Well, let's see. I haven't been an outspoken critic of, you know, sort of, I do think we need to increase defense spending. I've definitely been somewhat of a critic of the amount of venture dollars going into, you know, sort of defense tech and that probably being, you know, sort of overweighted relative to, you know, sort of what the sector can deliver and into a much broader set of logos than probably actually, you know, sort of makes sense. You know, I was kind of reflecting on this today where, you know, I think Q1 this year was probably the largest deployment into, you know, sort of defense tech companies that we've basically ever seen. And at the same time, you're also seeing the House and the Senate pass a continuing resolution for the year that basically means that they're freezing their 2024, you know, sort of budgets for the full year of

• 28:58Speaker 00

  2025. So that means no net new adds. That means any of the prior programs that were net new that were growing now have to stay flat. And so what does that mostly mean? It's hugely beneficial to the incumbents because it basically lets them say, hey, those new things that you were funding in prior years that basically got frozen for a year, those things aren't going to come in time for Taiwan anyways. Just ditch those, you know, come work with us instead. You know, I do think you're starting to get a little bit of some sour taste in some of everything from like the, you know, congressman to, you know, sort of generals that are starting to see, hey, like, you know, Silicon Valley is a little bit, you know, claiming a little too much credit relative to what they've actually delivered for us. And why are all these guys funding billions of dollars into things that, you know, kind of look like science fair projects? So, yeah, I do think that,

• 29:40Speaker 00

  you know, it feels a little unrealistic, but it's not to say that like companies like Andor will do phenomenally well. But people have to remember, like, there's not going to be like five Andorals. Like, there's probably going to be an Andor. There may be like a number two. That's probably about it, you know, in that sphere of like next generation defense prime. Are there going to be things that are like, you know, you know, take like a, you know, Hadrian that is like a supplier to, you know, an Andor? Yeah, sure. That's like, you know, kind of a, you know, different category. But the things that are going head to head against them as like a next generation defense prime, that feels like a pretty crazy over rotation. And then, you know, I think it's obviously exciting to see that, like, you know, in the grand scheme of things, I do think that the Trump administration has put together a really phenomenal team to address the deficiencies that we have around next generation hypersonic vehicles, nuclear weapons modernization, you

• 30:25Speaker 00

  know, upping our shipbuilding capacity. And they're obviously already starting to execute on that and some of which is a, you know, huge set of opportunities for the defense tech industry. But it's also no guarantee that that doesn't just go to a lot of the traditional defense primes

• 30:38Molly O'Shea?

  Are you concerned at all for any of these early-stage companies? Or do you think they're just, they shouldn't exist?

• 30:43Speaker 00

  Well, I don't think it's an or, I think it can be an and. I'm both, you know, so concerned for them and I don't think that they should necessarily exist.

• 30:51Speaker 00

  There being bubbles in venture is a feature, not a bug. In that it is both the way that you can significantly lower the cost of capitals for the leaders of those, you know, sort of fields, right? I'm not sure that OpenAI would be where it is if not for the AI bubble, because it allows them to deploy the level of capital they've had. You know, same thing with Andro, it was very contrarian for a long time. But I'm also sure that Trey's pretty happy that his cost of capital is probably like, you know, the lowest that it's, you know, ever been on a, you know, relative basis, because there's so many people that are so interested in defense tech. And so that almost certainly will propel Andro even further forward, which leads to the long-tail returns that make LPs happy, that justify the entire venture ecosystem that we all live in, that then makes a bunch of lemmings create future, you know, sort of bubbles.

• 31:32Speaker 00

  But the downside, you know, also of bubbles is, you know, is very easy to fall in the trap of, you know, let me spray and pray to everything that is relevant to the bubble and hope that I have great returns. When it turns out all that really matters are the, you know, one or two long-tail winners. And so, yeah, I do think that a significant number of the logos that are talked about today and the, you know, sort of top 50 in this field, yeah, you know, 47 of those are going to be companies that are completely irrelevant, you know, 15 years from today. What matters both as an investor and a founder is, have you invested in those top three? And as a founder, are you in those, you know, top three? Yeah, we have a particular angle that we've taken here. You know, I'm not trying to be, you know, just a, yeah, next generation, yeah, space defense prime. The next generation space defense prime is SpaceX.

• 32:15Speaker 00

  They're the largest, yeah, space defense prime, they have the largest contracts in that field. They are the long-tail winner. But, you know, I do think that as we're, you know, building our vision of what we think our long-tail outcome is around space factories, you know, are there things on the, you know, sort of margins that we can, you know, go and tackle that we think are pretty unique and are material? Not so material that we're the size of like an Andro or SpaceX on that alone. But, you know, big enough that it's a, you know, sort of nice, you know, stepping stone on the path to building our, you know, sort of grander vision of space factories. Whereas there are some people that are building their companies in a way where their only option is to, you know, build something that is the size of a SpaceX or an Andro. ...in the defense industry and I'm not sure that they have, you know, an appropriate path to getting there.

• 32:52Molly O'Shea?

  The power law lives on.

• 32:53Speaker 00

  The power law lives on and, uh, you know, uh, as I like to remind people, you know, venture capitalist, uh, really has two jobs. Um, it is to buy equities and it's to sell equities. Uh, and people sometimes forget the second part of the job.

• 33:05Molly O'Shea?

  It's just so fun, though. Why not?

• 33:07Speaker 00

  Buying is very fun. Um, I also like, you know, selling.

• 33:10Molly O'Shea?

  Yeah, yeah, that is good. So shifting over to the Hill and Valley Forum. So we recently had Christian Garrett on the pod. He covered this a little bit, but I'd love to hear from you. How did this idea initially start? And how's it gonna, how's it gonna go down this year?

• 33:26Speaker 00

  Yeah, um, so Christian and Jacob had a conversation. I want to say it was like July, August 21, where they're like, hey, we should do something around this field of like, bring Silicon Valley leaders together with, you know, sort of defense tech and, you know, elected officials. Um, and they both were like, you know, who should work on us with this, yeah, work on us with this, um, work with us on this is, uh, you know, sort of Delian. Um, and so they, you know, sort of pinged me a couple of days later. We got together and I was like, yeah, let's do this. You know, we can organize like a small dinner to start, see how this goes. Original dinner was supposed to be like 30, 40 people, ballooned into like 100. Got a ton of really great feedback from it. Let's run it back and let's do it bigger, better, better. Ran it back like six months later. Got even bigger, better, more elected officials.

• 34:05Molly O'Shea?

  Why? What was the energy around it?

• 34:06Speaker 00

  I think it was just like, it's one of these things where it's like, it just kind of felt like a moment in time that, you know, we just happened to capture the tailwinds of where there's obviously a lot of people that were, um, you know, sort of working, uh, with Capitol Hill before us starting this, right? Obviously, you know, groups like SpaceX, Palantir, and all that, etc. had been for a lot, around for a very long time. But it felt like in 2021 was the first time where it was now a much broader set beyond just that. And there were more and more people coming to the table and more and more investors that were interested in this. Um, and so it felt like the momentum and interest both from Silicon Valley wanting to engage with DC, but then also DoD and elected officials wanting to engage more with Silicon Valley, just were these like pre-existing trends that, you know, kind of made it together at the right time. Um, and so we've continued to run it on an annual basis. Each time I think we've, you know, um,

• 34:50Speaker 00

  uh, improved the quality of that, you know, sort of event and, you know, everything from who's speaking to who's attending. Um, this year we have speakers like Jensen Huang from Nvidia. Alex Karp from Palantir, Brian from Anduril, Keith from KV, Josh Kushner from Thrive. It's a really phenomenal set of tech speakers. And then we're going to be talking more about our political speakers over the course of the next sort of month or so. I think, again, a part of why you're seeing, in some ways, I think, the best event that we've put on yet is, again, because of this trend towards a bit more of unification and synergies between the two worlds. Again, it's not to say that, like, look, the vast majority of the DoD budget in 2020, sort of four and five, is going to go to incumbent defense primes.

• 35:35Speaker 00

  But, you know, and there's definitely some companies that are over-promising their capabilities and under-delivering. But in the grand scheme of things, I think there are still significant elected officials and DoD leaders that recognize that what an Anduril is delivering on CCA, what a Hadrian is delivering on the metal that they're cutting, the fact that we're landing capsules from space and testing hypersonic equipment, and actually doing it in our two-for-two. There's also some promise and some light at the end of the tunnel as well.

• 36:02Molly O'Shea?

  What are the biggest challenges for this year?

• 36:05Speaker 00

  Well, I think it comes back to what I talked about, which is, at the end of the day, none of these companies make sense unless they're making revenues. Those revenues ultimately have to come through budgets from the DoD. Those budgets have to be approved by Congress. The President, sort of Congress have both said that we are freezing those budgetary levels. Now, DoD is allowed to do some reprioritization and reallocation of that. It still has to reflect what sort of Congress and the President told them to prioritize. But that's going to be a real challenge for a lot of companies. There are a lot of companies that almost certainly had appropriations requests in for fiscal year 25 that now have gotten zeroed out. And so you're having to navigate that. And so, yeah, I think whenever you see that there is a huge mismatch between investor expectations and the inflow of capital, and then the end customer, which ultimately is the federal government,

• 36:50Speaker 00

  and their signaling, there's probably something that is a little wrong there. And so the fact that you're seeing the most insane pricing that I've ever seen for defense deals, while Congress is literally saying, like, we are not giving people more revenue this year. We've got to think about that a little bit. But yeah, that's probably by far the biggest challenge. And then probably the multi-year challenge is like, at the end of the day, there's only so many times you can like pitch on the promise of technology. It's got to like deliver something for the end warfighter, right? And honestly, very few of these companies outside of literally just Anduril and like Palantir have actually delivered on capabilities that are meaningful for the warfighter and SpaceX. Yeah, other than those three, there isn't really like a like unicorn VC-backed company that like has actually delivered things at scale for the warfighter. That doesn't really exist.

• 37:34Molly O'Shea?

  There's been a lot of positivity and at least a movement between Silicon Valley and DC, not just in space and defense, but across the board. I want to know from your perspective, is this hype or is this real? Is there really like a synergy happening between Silicon Valley and Washington DC? Or is this more of just headlines?

• 37:55Speaker 00

  Well, the barbarians have stormed the castle some amount, but it's also, you know, sort of subsets of the barbarians in that, you know, if you obviously look at a lot of their talking points, I'm not sure that JD or Trump were particularly pleased with your sort of big tech's actions over the past, you know, sort of eight years in terms of, you know, sort of censorship, you know, you know, election influencing, you know, what was allowed to go viral versus not. And so I don't think that it is this default happy, hunky-dory sort of relationship. I think you may see antitrust actions that were, you know, sort of just as punitive in the Biden regime towards tech, happening in the Trump regime towards big tech. And so that's not necessarily is your default good. So, yeah, I do think there is a little bit of like a rosy picture right now, both in

• 38:39Speaker 00

  like defense and aerospace, but also more broadly in terms of like, oh, like, there's a bunch of tech leaders now in, you know, sort of the hill. And, you know, that means that they're going to do things that are great for tech. And I don't think that is necessarily default the case. If you both study what their talking points are, if you look at the policies that they're sort of putting out, it is not like default good for Silicon Valley. Like, you know, JD Vance, if you remember, like, you know, is definitely prioritizing like the like working man in Ohio. And so like, he's like super high, like China, Canada, and like, you know, you know, Mexico tariffs definitely also impact a lot of like Silicon Valley's like portfolio companies. And so, yeah, I guess, yeah, I don't, I don't think it's a just like, you know, this is default good across the board. And I wouldn't even say that's necessarily something that I disagree with either.

• 39:22Speaker 00

  Like, I think, you know, they have some points on why they're doing a lot of these things. And then, you know, even also on their approach to part of fiscal policy, I'm definitely Proponent of Secretary Besen's talking points around, you know, we may need a little bit of a detox period from government spending, and that may involve some shakiness in the public equities. That means, you know, shakiness in companies' abilities to IPO. That means shakiness in VCs' abilities to deliver returns to LPs, which then means shakiness in LPs' interest in backing VCs. And so that's also not necessarily, you know, hunky-dory either. So, yeah, I've tried to, you know, sort of, you know, put out some caution lights to some of our, you know, sort of founders that are maybe having overly rosy pictures on what the next couple of years of capital markets looks like. And I think people should

• 40:05Speaker 00

  be ready for a little bit of, you know, sort of rockiness as we, you know, sort of transition from still filtering out the crazy quantitative easing that, you know, should happen under the Biden administration in the first year or two.

• 40:15Molly O'Shea?

  In terms of venture capital, congratulations. You've made it six years at Founders Fund. Big deal. What are your biggest learnings?

• 40:24Speaker 00

  Oh, man. Um, let's see. I've made a lot of mistakes. Maybe the learning is like the mistakes aren't really the things that matter. It's leaning into the good. You know, I'm reminded of the power law in that, you know, basically, you know, ramp plus sword drive everything. And, you know, the rest of everything that I've worked on is effectively a rounding error in comparison. I think I, you know, have learned that the constraints that working on something like Varda provides, I think, actually make me better at venture because it really forces you to focus on only the like, two, three, four decisions a year that you really make that matter, and really just focusing only on those rather

• 41:09Speaker 00

  than a bunch of other, you know, sort of activity that isn't really gonna, you know, sort of lead to the long tail outcomes. I think I've definitely, you know, learned that my best edge is, you know, when a company has both a product and engineering edge, but also that still has to show up as a distribution edge. I think there's a handful of mistakes that I made in 2021 where I just like over rotated on like, oh, this is gonna be great engineering and so it'll work out. And it's, you know, sort of not to say that I'm the right investor for something that's like pure network effects. Like, I don't think like I'm the best person to write those. But when there is some decent enough distribution or solid enough such that the product engineering really does give you a great edge, I think that's kind of, you know, plus assessing, you know, sort of founder personality, founder

• 41:51Speaker 00

  market fit, their resilience and grit. You know, I think that is sort of my sweet spot and I should just, you know, continue to focus on that. Maybe the other lesson is while I think I am best at seed and A, I do probably need to start to push it a little bit outside of my comfort zone in that when you're at the scale of the capital that we're deploying and managing, it is really valuable to have those early relationships, right? Leading the seed and the A of Ramp is what gives us the right to win on a lot of their future rounds and allocation, even just doing parada in those rounds. But at the same time, a bunch of $1 million seeds are hard to use to influence the outcome of a billion dollar fund.

• 42:34Speaker 00

  And so, a tangible example of this, you recently led the charge on a Series B that we're leading from Founders Fund, that's a $36 million but net new check for us. So it's not a portfolio company that we're doubling down into. That for me, in terms of process and size of check, is the largest that I've ever led the diligence on for a net new to the portfolio company. Versus obviously with Ramp, we've doubled down with 100 and plus million dollar checks, but very different than something where you're entering into it for the first time. And if you do the math on that, it's like 5 or 6X in that is like super meaningful for the fund. Versus even the best seeds don't always 150X.

• 43:15Speaker 00

  And so, in some ways, IRR definitely really matters, but there is some amount of cash on cash returns that really matters, especially as you're starting to see the venture ecosystem get constrained to a smaller set of players and companies staying private for longer and longer, which is naturally leading to, even for the best funds that are, I think, very disciplined like we are, our AUM is steadily growing over time. And if your AUM grows, but your average check size does not, then by default, in order to be meaningful for the fund, your IRR really has to grow like crazy. And that's honestly kind of difficult to do in today's environment.

• 43:55Molly O'Shea?

  What is your average check size and pricing?

• 43:57Speaker 00

  It's generally grown over time, partially due to some of these realizations. Probably my mean check size is probably like...

• 44:12Speaker 00

  Seven or eight million, but the median is probably three or two. And probably both the mean and the median probably need to sort of go up over the next sort of five years in order for me to adapt to today's environment. And I probably need to do things that aren't just aerospace, defense, tax. I don't know, that's the only thing that I've been doing over the past few years, but I've definitely been heavily biased towards that. And that trend, you know, there's just not that many interesting seed rounds to do anymore because a lot of the winners have been picked. And so kind of need to figure out what that sort of next trend that I can identify that's going to be really important five years from today that, you know, can start doing seed rounds into today.

• 44:47Molly O'Shea?

  You ended up leading more rounds in the last four months than the last three years.

• 44:51Speaker 00

  It's true.

• 44:51Molly O'Shea?

  So what happened there?

• 44:53Speaker 00

  Um, well, you know, a part of it sometimes, I think it's just chance where, you know, you just happen to stumble across a, you know, a set of really good founders, all that happened to come to you at the same time. You know, a part of it is that I think some really high quality founders chose to over raise in the depths of, you know, sort of 21 and 22 as things were heading into the bear market and then chose to stay off the market for an extended period of time. And that was what we sort of chose to do at Varda as well, where we sort of hunkered down and decided to avoid the capital markets for a while. And so I do think if somebody was out in fundraising in the true bear environment, it was because they didn't plan their capital well enough or respond to capital markets sort of well enough. And so I do think there's something about like the average quality of founder that

• 45:32Speaker 00

  was raising in Q4 24 was just higher than Q4, you know, sort of 23. And then, you know, part of it was, yeah, just the handful of things that I got involved in were just like fields that I knew really, really well, have been studying for an extended period of time. And so just when the right founder and the right, you know, sort of product and the thing that they were working on came to me, it was just very easy to get to conviction on even relatively large checks. So it was only three rounds, but those three rounds ended up, you know, sort of comprising, you know, on the order of something like, you know, $45 million, which for me is the equivalent of previously what I, you know, sort of been primarily responsible for. Obviously I still collaborate on all these with a lot of my team members or, you know, colleagues at FF, but you know, is the equivalent of what I'd previously done, you know, over the course of like a two year or even three year period.

• 46:16Molly O'Shea?

  Could you, could you share some of the companies that you've invested in?

• 46:20Speaker 00

  Unfortunately, that past quarter of stuff, nothing's been announced yet. So yeah, nothing.

• 46:24Molly O'Shea?

  No, not those. In general, I'd love to know more about your portfolio.

• 46:28Speaker 00

  Oh, sure.

• 46:28Molly O'Shea?

  I feel like your investing story is kind of like under the radar because Varda takes up so much of the spotlight.

• 46:36Speaker 00

  Yeah, yeah.

• 46:37Molly O'Shea?

  Explain and also list out every single company you've ever invested in.

• 46:42Speaker 00

  Well, I'll start from the top down in terms of FMV is probably the easiest way. Ramp by far is the sort of largest by FMV and total dollars into the company. Obviously, one that I had to collaborate with a lot of colleagues on, you know, sort of Keith was heavily either sort of involved, obviously, in the later stages, my colleague and general partner Napoleon, a lot of growth investing was heavily involved, but definitely one that, you know, sort of I helped navigate through the firm and source into the firm and, you know, helped negotiate the seed in Series A.

• 47:12Speaker 00

  That was one where we had been thinking about it as a thesis internally at Founders Fund and had really gotten to know the CTO cream there. And I think he just presented, although I typically am not doing pure software investments, it's one where the combination of software plus regulations, complex coordination felt a little different than like an enterprise CRM tool, let's say. And I really felt like, you know, sort of cream and Eric from their prior Paribus experience with their first company just had such a chip on their shoulder from that, but also had the perfect background to go and build a corporate card, you know, sort of company, but that wasn't just built around like points and a sort of champagne campaign, but instead was built around what a CFO ultimately cares about, which is sort of saving time and money. And I thought it was actually, you know, it sounds very simple, but was a surprisingly very unique angle.

• 47:56Speaker 00

  And, you know, it was at the time quite contrarian, given that the incumbent, you know, was seen as a multi-billionaire company that was often the races. It didn't seem like there was an angle to unseat them. Obviously, so now it's been totally unseated and Ramp is the clear winner in the category. But there was something that, you know, again, it came down to fundamental product and engineering being better and, you know, they were good enough at distribution, let's say. And I think I've gotten also, you know, look at their now Saquon Barkley ad, they're sort of crushing it.

• 48:20Molly O'Shea?

  They're killing it.

• 48:21Speaker 00

  At distribution, but they were not so good at distribution for a long time. But, you know, generally.

• 48:24Molly O'Shea?

  And recently hit a $13 billion valuation in the secondary markets.

• 48:28Speaker 00

  Above the high watermark of, you know, any of their. Sort of even peak Zerpa era, you know, sort of valuation. So it shows that they've really built up a healthy business. So yeah, I feel really grateful to have been involved there. The second by FMV is this company called Sword Health, originally led the series A from Coastal Ventures, five on 25 post. And then doubled down and joined the board and then doubled down from Founder's Fund when I shifted over to there. That one, you know, sort of similar thing. It was a market that I believe a lot in. I'd dislocated my shoulder when I was younger and gone to a brick and mortar physical therapist that was super archaic, clearly something that you could solve with some sensors, AI, software. There were some pre-existing incumbents that at the time, again, were unicorns, but I thought didn't really have great product. Met Sword and the team, read through their clinical papers. They clearly had a differentiated product.

• 49:10Speaker 00

  You actually saw it show up in differentiated clinical outcomes. They were just good enough in distribution that I thought they could figure it out. And yeah, lo and behold, you know, here we are, you know, sort of six years later, you know, company. I think the most recent announcement was at three billion, but yeah, they've done even higher, let's say recently.

• 49:26Molly O'Shea?

  Oh, okay.

• 49:27Speaker 00

  And, you know, they have, from that prior unicorn incumbent that was thought of as the pre-existing winner. I think we've stolen like 15 Fortune 500 clients at this point, you know, sort of from them. And so, you know, and it all comes down to the fact that like, again, just like the CFO cares about saving time and money, the CMO also mostly cares about better clinical outcomes and saving money. And they do that far better than anybody else. And so the company's growing like crazy. It's profitable. They've got multiple product lines. And so, you know, I think they're going to be one of the very few sort of like health tech companies that actually does well. And it's funny because like there's whole funds and partners that dedicate their whole lives and portfolio to health tech. And I just focused on the one that actually mattered and invested in that one and kind of same thing in fintech.

• 50:09Speaker 00

  And then after that, it's a smattering of mid-stage companies, you know, Varda, you know, Hadrian and a few others, but yeah, those are kind of like the, you know, sort of major outcomes. Everything else that I've done is, you know, sort of, let's say below unicorn status and, you know, sort of earlier, but I think, you know, delivering to from C slash A to, you know, a pretty large outcome is, I think, not bad for an early-stage investor, six and a half years in, given that like, unlike growth investors that maybe start at unicorn stage and then they just see the unicorn scale. You know, my average entry price into those two was 25 post. And so getting to, you know, four plus billion takes some time.

• 50:46Molly O'Shea?

  You tweeted out that seed investing is a bad setup for a full VC job. Are you hinting that VC is just a hobby?

• 50:55Speaker 00

  Um, I think that it is a better, you'll perform better if it's a hobby. So you take that as you wish. I think that there's, you know, very few companies per year that matter. There's obviously people that take the strategy of like, they lead like, you know, 40 plus seeds and spray and pray every year, and that can definitely generate some level of returns. But, um, uh, you know, I'm not sure it's the, you know, sort of best use of the strategy. And if you do VC full time, it's very easy to delude yourself into thinking that you're investing into a top percentile founder. Because if you go out and meet with a thousand founders and you, you know, sort of choose the top 10 and invest with them. Okay, yes, you're, you know, sort of investing into the top percentile.

• 51:35Speaker 00

  But, you know, if you were actually to, you know, survey the whole planet and realize that all that really matters is like the point 001 percentile, you'd probably realize that actually like only one of those thousand that you met with mattered. And so my goal is ideally only meet with, you know, 30 founders per year. But make sure that one of those 30 is that, you know, sort of point 001% you know, sort of founder. And I think it's honestly, and I'm not saying it's perfect. I'm sure that like, there are going to be years where I miss that because I'm not willing and able to meet the thousand. But I generally think that you're much better off just meeting the 30, you know, sort of per year. And instead, spending the rest of the time showing why you can even be a useful partner. Because when one of those 30 comes up, if they're really good, they have a multitude of offers. You know, take Chris at Hadrian. I think there was like seven seed round offers.

• 52:17Speaker 00

  And a part of why he took mine was because I was the only other person that was like in the trenches, building a company. And, you know, was not, you know, sort of a journalist sitting on Twitter all day, you know, tweeting. And I think that was what he valued in that offer. And so I think, you know, if you look at the post-call 2015 timeframe, the people that make it onto the Midas list, which while an imperfect list is maybe the closest that we have to an objective ranking function of VCs. The, you know, sort of, uh, the only ones that have made it down to the, you know, sort of top 100 in the post 2015 timeframe that are early-stage investors are only people that have had significant operational backgrounds. Like pre 2015, for sure, you have people like Bill Gurley, et cetera, show up. But post 2015, there's basically nobody with that operational background, which I see as the founder market signaling that,

• 52:57Speaker 00

  hey, you know, we want people on board that again, aren't just journalists or, you know, sort of hedge fund, you know, you know, background types. We want people that, you know, are actually other builders. And so the extreme version of this is you're seeing like the Dylan Fields of the world lead Series As. Man, if you're a venture investor and you're like competing against Dylan Field, it's like, do you want the guy that like built the, you know, whatever 17 billion dollar company? Or do you want the guy that like wrote a couple essays on Medium? It's like, you know, Probably the guy that built the 17 billion dollar company is probably going to be a little more useful for you when you like call him at 9pm with an emergency.

• 53:29Molly O'Shea?

  As we close out, I want to reflect on your fatherhood, your new journey into fatherhood. So how has this changed how you view the world and your perspective? And what are the biggest lessons you've had?

• 53:43Speaker 00

  Let's see, well, I think it gives you a deeper appreciation for sort of investment into the future and having a really sort of long-term approach to building both your personal and contributing to the global future because you think about what is the world that my children will grow up in?

• 54:00Molly O'Shea?

  Maybe on Jupiter.

• 54:02Speaker 00

  Maybe on Jupiter where they get super jacked. And then I think on a personal basis, it just really changes how you think about prioritization. I think when I'm in the office, I'm just like hyper, hyper focused on work because it's any minute that I'm here, I'm taking away from being with my kid and I better have a really good justification for that. Definitely obviously changes your personal life in a ton of ways.

• 54:22Speaker 00

  Probably used to do a worker, social dinner like four or five times a week. Now the exception is if you do two in a week and that's honestly pretty rare. Most of the time it's like one, if not zero, most of the time. It's a different phase and chapter in life, but I'm thrilled to be in it. I'm somebody that grew up in an Eastern European household where my parents had kids quite young and family and the prioritization of that was always very top of mind. And so I always kind of had this goal as a kid of like, I wanted my first kid at 30 and my 30th birthday was November 30th, 2023 and he popped out December 5th. So I was like five days late, but sort of close enough.

• 55:03Speaker 00

  But yeah, it's the greatest joy that one can experience and really grateful to be a father and fingers crossed he stays sort of healthy and I get to share as many years as possible on this planet Earth with him.

• 55:18Molly O'Shea?

  Amazing, that's so sweet. That's a great note to end on. Well, thank you, Delian. Always wonderful to have you on. Never know what you're going to say, but we love it every time.

• 55:29Speaker 00

  Yeah, thanks for having me, Molly.